My Investing Process

Translate This Page

Become a Fan

According to PEHub, Ele.me, a food delivery service based in Shanghai, announced this afternoon (link via Google Translate) that it has raised $350 million in Series E funding from CITIC, Tencent, JD.com, Dianping.com, and Sequoia Capital.

The investment is notable because Tencent, e-commerce company JD.com, and restaurant review site Dianping.com are closely aligned. Investing in Ele.me, which operates throughout China, can potentially help all three businesses build their online-to-offline (O2O) strategies.

In its announcement, Ele.me (which means “hungry yet?” in Chinese) said it will continue to operate independently. The company, which serves 250 cities, with 200,000 restaurants and 20 million users on its platform, said that in 2014 its total order volume reached 110 million renminbi, with 75 percent of orders made through its mobile apps.

O2O is an important market for companies like Tencent, Baidu, and Alibaba to tackle because it allows them to leverage their existing network of websites and mobile apps to bring users into traditional brick-and-mortar stores, therefore opening up more ways to make money.

Alibaba’s O2O plays include affiliate Alipay, China’s leading mobile payment services company, as well as promotions that its various online marketplaces run with brick-and-mortar retailers.

Tencent can potentially use Ele.me to power food delivery services on WeChat, China’s top messaging app. Several businesses, including Chengdu-based “Call A Chicken,” already use WeChat to connect with customers. Adding food delivery would add to the roster of services WeChat already offers in China, including the ability to hail taxis from Didi Dache, another Tencent investment.

Founders often speak about their start ups as having a destination--acquisition, IPO, independent company, whatever. I tell them there is no such thing as a destination for a company, only a journey. Few companies have an actual end to a journey--they can morph into something else, continue as a subsidiary or move ahead under new management. It's most important for a founder to focus on a journey as that is the exciting part of their trip.

A destination is like the dog catching the rabbit on a race track, kind of a downer, and results in a 'no race' ruling. The journey is the where the action is, where you get a chance to shape the future and to be part of creating something no one else has ever done.

So focus on the journey, entrepreneurs and enjoy the ride, because the destination can often be disappointing, unless all you care about in money...

Instacart, our favorite grocery delivery company, joins the ranks of the unicorns, with a $220 million dollar raise on a $2 billion dollar valuation. According to Re/code, this comes just six months after Instacart raised $44 million at a valuation of about $400 million in a round led by Andreessen Horowitz. It has now raised a total of about $275 million since it started in 2012 and its other investors include Sequoia Capital, Khosla Ventures, Canaan Partners, Y Combinator President Sam Altman and Box CEO Aaron Levie.

The Wall Street Journal reports that there have now been more than 40 start ups that raised money worldwide at a valuation of $1 billion or more, double the number at the start of the year. Adjusted for inflation, there are now 70 of these so-called $1 billion unicorns, about twice as many as there were at the top of the tech bubble in 1999 and 2000.

As I have often noted in this Blog, the hundreds of local delivery companies are ripe for consolidation, as any good supply chain guy can tell you that supply chain is all about scale and greater scale means lower costs as one can better optimize routing, warehouse space and planning activities.

Perhaps not just yet, however. We need to go through a shakeout period where the weak fall and the strong then get acquired. This would be a normal pattern for either strategic or PE acquirers--wait and see who wins and loses in a new space, them sweep in and pick up the winners.

We'll see if anyone like FedEx or UPS gets antsy and goes after some of these guys earlier. They did make some interesting acquisitions in 2014--Bongo and iparcel, in particular.

Check out some interesting statistics on the food delivery world from CB Insights.

According to Boston Business Journal, with the boom in e-commerce orders around the world, there's only one problem, specifically for apartment dwellers: Those packages that you've ordered are piling up in your lobby and someone might take them.

Medfield-based Package Concierge Inc., a maker of so-called digital lockers for apartment buildings and college dorms, aims to fix that problem. The startup recently raised $1.3 million in equity funding, according to a recently regulatory filing.

Although the company could not immediately be reached for comment, theJan. 28 filing lists three investors.

The lockers from Package Concierge are constructed from steel, and the kiosk, powered by the Windows 8 operating system, contains a security camera. The lockers allow access for delivery services like UPS or FedEx to drop off packages without requiring the assistance of an apartment building's management personnel. Residents can access their packages by swiping a key fob across a panel, forcing their locker door to open.